Legislations in the UK and EUwhich is aimed at inspiring consumers confidence in the financial sector Nadia Tarik

1.1.10.3 The Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is a separate institution – ie it is not part of the Bank of England. It aims to ensure that financial markets work well, so that consumers get a fair deal. It has three statutory objectives: N To secure an appropriate degree of protection for consumers. N To protect and enhance the integrity of the UK financial system. N To promote effective competition in the interests of consumers.

Banking Act 2009 Allows the Bank of England to close down a bank before it becomes insolvent to protect the rest of the financial services industry N Gives the Bank of England a new statutory financial stability objective

Financial Services and Markets Act 2000 N Established the Financial Services Compensation Scheme (FSCS) to protect consumers’ deposits should providers fail N Established the Financial Services Authority (FSA) as regulator of the industry and set out the regulatory framework

Consumer Credit Act 2006 Introduced the Financial Ombudsman Service) Increased the powers of the Office of Fair Trading (OFT) to investigate organisations that apply for consumer credit licences, to impose conditions on licences and to charge organisations that fail to comply with penalties of up to £50,000 – which means that lenders and their products must meet standards that are designed to protect the interests of borrowers Introduced the Financial Ombudsman Service (see Topic 3) Increased the powers of the Office of Fair Trading (OFT) to investigate organisations that apply for consumer credit licences, to impose conditions on licences and to charge organisations that fail to comply with penalties of up to £50,000 – which means that lenders and their products must meet standards that are designed to protect the interests of borrowers

Financial Services Act 2010 One of the main objectives set by the FSA is to avheive finanacial stability. N Gave HM Treasury powers to make regulations about financial services providers’ remuneration policy, which powers have been used to discourage risk-taking by bank staff N Set out the objectives of the Consumer Financial Education Body (CFEB), now renamed the Money Advice Service (MAS)

Financial Services Act 2012 N Established an independent Financial Policy Committee (FPC) that monitors risk to the UK financial system and can take action to ensure sustainability N Replaced the FSA with two regulatory bodies: the Prudential Regulation Authority (PRA), to supervise firms; and the Financial Conduct Authority (FCA), to ensure that providers prioritise the interests of their customers and operate with integrity, and that there is effective competition in the market, so that consumers have more choice of providers and products

Financial Services (Banking Reform) Act 2013 Introduced a ‘ring fence’ around consumer and small business deposits to separate them from riskier banking activities, such as trading in stocks and shares N Gave the PRA powers to force banks to separate these activities N Provided new penalties, eg bankers found guilty of reckless misconduct that leads to bank failure can be sent to jail N Gave depositors protected under the FSCS preference if a bank enters insolvency, so that they are more likely to get more of their money back (not only the amount protected under the FSCS) N Introduced a cap on payday loans